U.S. Reps. Zoe Lofgren (D-CA) and Ken Buck (R-CO) recently reintroduced the Bankruptcy Venue Reform Act (H.R. 1017) to ensure corporate bankruptcy proceedings are adjudicated locally, enabling those impacted most to fully and fairly participate.
The measure would aid employees, small businesses, and local communities.
“Rep. Buck and I are reintroducing this commonsense legislation because we know that it is simply unfair that corporations can game the bankruptcy system by choosing a distant court where there is a cottage industry to advantage their interests,” Lofgren said. “Justice is best served when corporate bankruptcies are adjudicated locally, with convenient court access for employees, retirees, and local creditors, as well as a judge who knows the affected community.”
Per the legislation, Chapter 11 bankruptcy proceedings would be required to occur where the principal place of business or principal assets of the corporation is located.
“Under current U.S. law, corporations filing Chapter 11 bankruptcy have the ability to venue shop and potentially choose a court that has issued lenient rulings in similar cases,” Buck said. “Our bill will require corporations filing Chapter 11 bankruptcy to go through those proceedings in the forum they are primarily located rather than running off to a court across the country. This will eliminate companies’ ability to tilt the scale of justice and ensure the case is heard in a court familiar with all the affected stakeholders.”